How and when to register for GST as a sole trader
Knowing how and when to register for GST can be tricky for a sole trader, particularly if you're just starting out and are unsure what your turnover will be. In this guide, we look at the rules around GST and how to register.
What is GST?
GST, or goods and services tax, is a standard tax that applies to most products and services sold in Australia. Currently set at 10%, the tax is generally collected by the vendor as part of the price when an item or service is sold, and then passed on to the Australian Taxation Office (ATO).
When do sole traders need to register for GST?
Sole traders, like all businesses operating in Australia, need to register for GST when their business has an annual GST turnover of $75,000 or more. If your turnover for the past 12 months was $75,000 or over, or your projected turnover for the following year looks set to cross the threshold, you're required to complete your GST registration within 21 days.
There's one exception: if you're a taxi, limousine or ride-share driver, there's no threshold — you must register for GST.
You can also choose to register for GST even if your turnover falls under the threshold. Some sole traders register voluntarily so they can claim GST credits on business purchases or prepare to go over the threshold in future. Charging GST can also help make your business more appealing to some suppliers, as they can claim GST credits back when they buy from you.
How to calculate GST turnover as a sole trader
Your GST turnover is your total business income (not just your profits) minus certain types of sales. Here’s how to calculate your GST turnover:
Total business income minus:
GST included in sales to customers
Sales to associates that aren't for payment and aren't taxable
Income from sales that aren't connected with your business
Input-taxed sales
Sales outside Australia
Registering for GST as a sole trader
Registering for GST as a sole trader includes:
Check if you are required to register for GST
Check ATO guidelines to see whether your business is required to register for GST.
You must register for GST if:
Your business has actual or projected annual GST turnover of $75,000 or more
You’re a taxi, limousine or ride-share driver — regardless of income
You want to claim fuel tax credits for your business
Ensure you have an ABN
Ensure that you have an Australian Business Number (ABN), or you won't be able to complete the GST registration process. An ABN is a way of registering your business as an official entity. It identifies your business on tax returns, invoices and other documents, and is useful for claiming certain tax credits or getting an Australian domain name.
If you don't have an ABN already, register here.
Register for GST through the ATO
The ATO handles GST registration in Australia. Once you have your ABN, you can complete your registration by:
Using the ATO online services portal
Calling the ATO on 13 28 66
Working with a registered tax or BAS agent
Completing an Add a new business account form, which is available from the ATO
How to charge and collect GST
Charging and collecting GST is a requirement once you've completed your GST registration. You must charge 10% GST on all sales to Australian residents, apart from basic food products, educational courses, medical supplies and other GST-free items.
Here's how it works:
Calculating GST
Calculate the amount of GST to add to the price of your products or services using this simple calculation:
Price X 1.1 = GST inclusive price.
For example, if your product price is usually $14, the GST-inclusive price would be $15.40 (14 X 1.1 = 15.4)
Accounting software is the easiest way to calculate, apply and track GST consistently without the need for manual calculations.
Tax invoices
Tax invoices must be provided within 28 days of a customer asking for a tax invoice, unless the sale is $82.50 (including GST) or less. You can provide the tax invoice at the time of sale, or within 28 days of a request from the customer.
Tax invoices need to include:
The title 'Tax invoice'
Your business name and ABN
The date the invoice was issued
A brief description of the products or services sold, including quantity (if applicable) and price
The amount of GST charged (or a note that the total cost includes GST)
If a sale is worth $1,000 or more, you're also required to include the buyer's business name and their ABN or address details.
Here's how to create a GST invoice in MYOB.
Claiming GST credits
When you're GST-registered, you can claim credit for GST paid on any items or services used for your business — as long as the purchase doesn't relate to making input-taxed supplies — and you have a tax invoice. Ask your supplier for a tax invoice showing the total price and GST paid so you can use the information when you make a claim.
Sole trader GST FAQs
Can I claim back GST as a sole trader?
Sole traders can claim GST credits on business-related sales if they are GST-registered. Find out how to claim GST credits.
Is GST based on turnover or profit?
GST is based on turnover, not profit. However, when you calculate your GST turnover, certain types of sales are excluded – check the ATO guidelines to find out more.
What is excluded from GST turnover?
Certain types of sales are excluded from your GST turnover calculation, including:
GST included in sales to customers
Sales to associates that aren't for payment and aren't taxable
Income from sales that aren't connected with your business
Input-taxed sales
Sales outside Australia
Income received from the sale of business assets
Foolproof GST tracking for sole traders
When you're a sole trader, handling GST is just another item on an endless to-do list. But, if you're earning over the threshold, it's also a must-do. MYOB takes care of GST tasks for you, making it easy to generate invoices, add to prices and keep track so it can be recorded on your BAS (Business Activity Statement) or tax return.
Want to cut through the GST confusion? Get started with MYOB today.
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.
MYOB is not a registered entity pursuant to the Tax Agent Services Act 2009 (TASA) and therefore cannot provide taxation advice to clients. If you have a query concerning taxation including filing your BAS return or annual tax statements then you should consult with your accountant or other registered tax adviser.